The ongoing uncertainty over prospects of the crisis-swamped Greek economy continues amid the postponement of major reforms and what is being described locally as “negative profiteering”, or in other words, “what’s now cheap will be even cheaper” in the immediate or near future.
Greek real estate has already lost 42 percent of its value, according to estimates, while its downward slide continues, according to figures by the Bank of Greece.
The Athens Stock Exchange (ASE) has returned to levels of 1989, while nominal wages have dropped by a third, much more than prices, a development that means a continuous decrease in real wages. Moreover, while GDP showed a marginal increase of 0.7 percent in 2014, as least on the books, in current prices the figure shows a drop of 2.8 billion euros, yoy.
Usually, the “tools” in a central government’s arsenal to deal with such negative economic trends come either from monetary policy (slashing interest rates, circulating more money, depreciating your currency etc.) or through fiscal stimuli, such as reducing taxes, boosting public investments and other actions.
Unfortunately, in Greece’s case, memoranda commitments preclude most of the aforementioned actions.
At present, the current Greek government is focusing on completing the procedure for the first evaluation of the “Greek program” by its institutional creditors, a positive development that will at least reduce uncertainty.
Nevertheless, with the Greek economy expected to remain in recession in 2016, whatever hopes for growth focus on foreign investment interest, given that values have dropped for Greece-based businesses and properties.
Whatever guarded optimism clashes with what are expected to be even more recessionary measures taken by the government, such as pension cuts, tax hikes and even higher social security contributions by employers and employees.
Along those lines, international auditor PwC foresees no change in the Consumer Price Index for 2016 and a decrease in 2017 by 1.4 percent. In fact, Greece is projected to be the only country with a negative CPI forecast, amongst the countries surveyed.
